Congratulations!!!


Congratulations

Congratulations!  You, the American taxpayer, are now part-owner of General Motors!  Ownership perks include more federal government control over private companies, higher taxes, and even more shoddy leadership of an already hurting industry.

This morning, GM filed for Chapter 11 Bankruptcy.  As part of the plan, the government will provide $30 billion in additional assistance to the hurting company, following $20 billion of taxpayer funds already received.  This is the 4th largest bankruptcy in U.S. history but the largest for an industrial company.

Obama administration officials are saying that they didn’t want to do this but that it was necessary and that the government will be a “passive” controller of the newly restructured company.

As part of the plan, the federal government takes 60% ownership of the company.  The Canadian governement would get a 12.5% stake, with the UAW (United Auto Workers) getting 15%, and GM bondholders only receiving about 10%.

The Obama administration says that they will sell equity stakes in the company “as soon as practicable”.  Something tells me, along with the other now partially government-controlled companies, that the federal government’s talons will be buried in these companies for quite a long while.  I hope I am wrong.

The government “provisions” in this deal by the federal government really made me laugh…

These are the White House “principles” for managing the ownership stake:

— The government will sell equity stakes as “soon as practicable.” The goal is a profitable company without government involvement.

— The government will reserve the right to set up-front conditions to protect taxpayers, promote financial stability and encourage growth.

— The government will manage its ownership stake in a hands-off, commercial manner. It will not interfere with day-to-day company operations. No government employees will serve on the boards or be employed by these companies.

— The government will only vote on core governance issues, including the selection of a company’s board of directors and major corporate events or transactions.

If you think about it, the last three are somewhat contradictory of each other, aren’t they?  Principle #3 from above states that the government will manage its ownership in a “hands-off” manner, yet #2 states that they reserve the right to set up-front conditions.  Well, if that’s the case, what will keep them from setting such restrictive conditions that they will, in effect, really not have a hands-off approach to managing their ownership?  Then considering that Obama has already set the precedence of firing private company employees, why should we believe that they will keep their promise on principle #4?

President Bush really got the ball rolling on this whole socialist-lite movement but Obama is really stepping up the speed at which that ball continues to roll.  Let’s hope someone kicks that ball out from under his feet pretty soon.

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